PAYE Settlement Agreements (PSA Tax)

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What is a PAYE Settlement Agreement?

A PSA allows an employer to make one annual payment to cover all the tax and National Insurance due on taxable benefits for their employees. If they get a PSA for these items they do not need to put the payments through their payroll or include the payments in their end-of-year P11D forms.

The expenses or benefits included in a PSA must be minor, irregular or where it would be difficult to divide value between individual employees. The employer must pay any tax and National Insurance owed under a PSA by 22 October after the relevant tax year the PSA.

Where an employer has an existing PSA HMRC will issue a new form for the 2018/19 tax year before April 2018. If there have been no changes since the PSA for the 2017/18 tax year was agreed, all the employer needs to do is sign the new agreement. However a recent change is that once a PSA is in place for the 2018/19 tax year, this will no longer need to be renewed annually.

After 5 July 2018 the employer cannot apply for a PSA for the 2017/18 tax year.

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